The Dental Practice Sale

In this episode of The Dental Boardroom Podcast, host Wes continues his deep dive into dental partnerships, focusing on the potential downsides. Following the previous discussion on the advantages of partnerships, Wes now addresses key challenges such as decision-making conflicts, differing mission statements, profit allocation issues, and the complexities of new patient distribution. Whether you're currently in or considering a dental partnership, this episode equips you with the knowledge to approach these arrangements with your eyes wide open, avoiding potential pitfalls that could lead to costly disputes down the road.

1. Decision-Making Conflicts: Partnerships require mutual agreement on critical decisions like hiring, spending, and tax planning, which can lead to friction.
2. Differing Mission Statements and Values: Misalignment on long-term goals and practice strategies can create tension between partners.
3. Profit Allocation Complexities: Properly distributing profits is essential, and failure to do so transparently can lead to significant conflicts.
4. New Patient Distribution: Mismanagement of new patient allocation, especially when a new partner buys into the practice, can be a major point of contention.

#DentalPartnerships #BusinessTips #Dentistry #DentalPractice #DentalBoardroom #SmallBusiness #PracticeManagement #DentalProfessionals #ProfitAllocation #BusinessStrategy

Episode Summary:

In this episode of The Dental Boardroom Podcast, host Wes Reid kicks off a six-part series on dental partnerships. Whether you’re in a partnership or considering one, this series is packed with insights. Today’s episode focuses on the pros of dental partnerships, with a deep dive into how financial efficiencies, particularly in overhead costs, can benefit multi-doctor practices. Wes breaks down the different categories of overhead costs—labor, labs, supplies, facility, marketing, and admin—and explains which are fixed versus variable, providing a clear picture of how partnerships can reduce costs while increasing profitability.

Key Points:

Introduction to the Partnership Series

• Six-part series focusing on dental partnerships: pros & cons, valuation, legal structures, success elements, buy-in timeline, and partnership agreements.

Financial Efficiencies of Partnerships

• Explains fixed vs. variable overhead costs in dental practices.
• Categories of overhead: labor, labs, supplies, facility, marketing, and admin.

Breakdown of Overhead Costs

• Labor: Generally fixed, with potential variable elements like bonuses tied to production.
• Labs and supplies: Variable.
• Facility, marketing, and admin: Mostly fixed.

How Partnerships Reduce Overhead

• The financial advantage of having multiple doctors to share fixed overhead costs.
• Example scenario: How overhead costs decrease when a second doctor joins a practice.

Selling a Dental Practice

• Introduction to PracticeOrbit.com as a modern solution for dental practice sales, featuring various selling options.

#DentalPartnerships #DentalPractice #DentalBusiness #DentalOverhead #DentalValuation #PracticeManagement #DentistLife #PartnershipSuccess #FinancialEfficiency #PracticeOrbit

Episode Summary:

In this episode of the Dental Practice Sale Podcast, Wes Reed dives into a key question for dentists looking to sell their practices: Should you use a broker? Wes offers a fair and balanced breakdown of six compelling reasons to hire a broker and six reasons why it might not be the best fit for every seller. He emphasizes the importance of understanding the process and context around using a broker, whether you’re selling to a family member or a specialized buyer. Wes also shares insights on navigating the matchmaking and closing phases of practice sales and how brokers can provide crucial support — or, in some cases, unnecessary costs.

Key Points:

Why Use a Broker?

• Access to a larger pool of potential buyers (the broker’s Rolodex)
• Expertise in creating an appealing practice prospectus
• In-depth knowledge of the practice sale process
• Brokers act as intermediaries, simplifying communication between parties
• Connection with specialized bankers, attorneys, and accountants
• Brokers are highly motivated to close the sale and get paid only upon completion

Why Not Use a Broker?

• Brokers are highly motivated to close the sale, which may prioritize speed over quality
• Rolodex size and network reach may not always be as extensive as promised
• Brokers may overpromise sale prices to secure exclusivity agreements
• Exclusivity clauses can lock sellers into paying commissions even if the broker does little to close the deal
• Broker fees, typically ranging from 7-10%, can significantly reduce the seller’s final profit

#DentalPracticeSale #SellYourPractice #DentalBroker #DentalBusiness #PracticeSales #DentalPractice #BrokerProsAndCons #DentalIndustry #DentistLife

What are the most common delays that prolong a practice sale?

In general, the people who hold up deals are banks and landlords.

But there are steps both buyers and sellers can take to prevent these delays and shorten the timeline for a dental practice sale!

On this episode of the Dental Practice Sale Podcast, Dental Attorney Matt Odgers joins host Wes Read to continue their conversation on expediting a practice sale.

Matt and Wes discuss how to fast-track legal and clinical due diligence, explaining why it’s crucial to negotiate vendor contracts and lease terms before you list your practice.

They also share 4 ways to determine the value of your practice and describe the relationship between list price and closing timeline.

Listen in to understand why buyers and sellers should both reach out to the bank early on and find out if Practice Orbit can help speed up the sale of your dental practice.

Topics Covered

• The legal documents a seller needs to prepare for a practice sale
• Why it’s crucial to negotiate vendor contracts and talk to your landlord before you list your practice
• What a seller can do to expedite the clinical due diligence of a practice sale
• What a buyer can do to accelerate the timeline for a practice sale
• 4 ways to determine the price of your practice and how the list price impacts the closing timeline
• Common delays in closing a practice sale associated with banks and landlords
• Why it’s the seller’s responsibility to negotiate the lease terms a buyer might need
• How much faster you can close a practice sale if it’s staged well
• How Practice Orbit accelerates the process of selling your dental practice
• Why you need a ballpark valuation of your dental practice and how to get it done for free
• 2 reasons you might use Practice Orbit to sell your dental practice

Connect with Matt Odgers

Odgers Law Group

Odgers Law on LinkedIn

Connect with Wes Read & Drew Phillips

Practice Orbit

Email [email protected] or [email protected] 

Practice CFO

Practice CFO on Instagram

Practice CFO on Facebook

Practice CFO on YouTube

Resources

Dr. Kevin Kenny on the Dental Board Room Podcast

The Role of Escrow on the Dental Board Room Podcast

Once a dentist makes the decision to sell their practice, they want it done yesterday. 

So, how long does a practice sale usually take? What can you do to accelerate that timeline?

On this episode of the Dental Practice Sale, Dental Attorney Matt Odgers joins host Wes Read to walk you through a typical timeline for selling a dental practice.

Matt and Wes discuss common delays that prolong the process, describing how to avoid those issues and shorten the timeline for a practice sale.

Listen in for insight on staging your practice for a sale and learn how to leverage Practice Orbit technology to fast-track the process of selling your dental practice.

Topics Covered

• Common timelines for a practice sale and important mile markers in the journey
• Wes’ motorcycle analogy for the process of buying a dental practice
• Why it’s beneficial to hire your accountant and attorney at the point of NDA
• How Practice Orbit technology shortens the timeline for selling your dental practice
• Potential consequences when the LOI to close period extends beyond 60 days
• Why it typically takes 4 months to sell a practice (once you’ve made the decision)
• What you can do to shorten the timeline for a dental practice sale
• How staging your practice for a sale is like preparing dinner for a family reunion
• Why Matt & Wes suggest having a weekly huddle with your team to drive the practice sale forward
• The primary financial and tax documents you need to prepare for a practice sale

Connect with Matt Odgers

Odgers Law Group

Odgers Law on LinkedIn

Connect with Wes Read & Drew Phillips

Practice Orbit

Email [email protected] or [email protected] 

Practice CFO

Practice CFO on Instagram

Practice CFO on Facebook

Practice CFO on YouTube

Resources

Dr. Kevin Kenny on the Dental Practice Sale Podcast

The Role of Escrow on the Dental Practice Sale Podcast

When is the best time to sell your dental practice? What factors should you consider to get the best price for your practice and have the best quality of life in retirement?

On this episode of the Dental Practice Sale, recurring guest Matt Odgers joins host Wes Read to explain why you want to start the process of selling your practice when collections are on the upswing.

Matt and Wes discuss the challenges of planning for a practice sale before there’s a crisis, challenging you to consider the financial and psychological aspects of retiring from dentistry.

Listen in for insight around selling your practice for reasons other than retirement and learn how to time the sale of your dental practice to get the best deal and ensure a smooth transition to the next phase of your life!

Topics Covered

• Why you want to start the process of selling your practice when it’s on the up
• The psychological challenge of planning for a practice sale before there’s a crisis
• Why you should know what your practice is worth (even if you have no intention of selling)
• Crises that require an immediate sale vs. crises that expedite the timeline for a sale
• Why financial independence is a primary factor in timing the sale of a practice
• How to know if you’re psychologically ready to stop working as a dentist
• Why Matt & Wes suggest planning what to do with your time once you retire
• How rising collections impact the price of a practice and speed of its sale
• Why it’s easier to sell a million-dollar practice as opposed to a $500,000 one
• Wes’ advice on paying off a 10-year practice loan
• What differentiates buying a dental practice from buying real estate
• Selling your practice to retire vs. selling your practice to pay off debt
• The benefits of selling your dental practice when interest rates are low
• Why Matt recommends timing the sale of your practice with your lease

Connect with Matt Odgers

Odgers Law Group

Odgers Law on LinkedIn

Connect with Wes Read & Drew Phillips

Practice Orbit

Email [email protected] or [email protected] 

Practice CFO

Practice CFO on Instagram

Practice CFO on Facebook

Practice CFO on YouTube

You’ve worked so hard for so long to build a private dental practice in your community. But now you’re thinking about exiting the business.

So, how do you know when it’s time to retire? What can you do to plan for the next chapter of your life?

Dr. Kevin M. Kenny is Adjunct Professor at the University of California, San Diego, and Founder of The Dr. Kevin M. Kenny Foundation, an organization that provides dental care at no cost to the working poor in San Diego and sponsors humanitarian missions overseas.

Dr. Kenny ran his own large private dental practice in San Diego for many years before retiring seven years ago.

On this episode of the Dental Practice Sale, Dr. Kenny joins host Wes Read to explain how he knew it was time to pass the torch and share his experience with selling a successful dental practice.

Dr. Kenny discusses the team of advisors you need to plan a practice sale and challenges us to consider what retirement will look like before we walk away.

Listen in for Dr. Kenny’s advice to young doctors on buying a dental practice and learn his simple blueprint for a successful practice sale.

Topics Covered

A high-level overview of Dr. Kenny’s career as a dentist

How Dr. Kenny knew it was time to sell his practice

Determining how much money you need for retirement

How bankers calculate the value of a dental practice

The CPAs role in helping you plan for a practice sale

Mitigating your tax liability in a dental practice sale

When to do a broker sale and when to sell your practice privately

The pros and cons of selling your practice to a DSO

Why you should hire an attorney who specializes in dental transitions

Cleaning up your books before you sell your practice

How to create a business plan for your retirement

Advice for young doctors who’ve just bought a practice

Dr. Kenny’s blueprint for a successful practice sale

The humanitarian mission of Dr. Kenny’s foundation

Connect with Dr. Kevin Kenny

The Dr. Kevin M. Kenny Foundation

Connect with Wes Read

Practice Orbit

Email [email protected]

Practice CFO

Practice CFO on Instagram

Practice CFO on Facebook

Practice CFO on YouTube

Resources 

Dr. Kenny on Dental Board Room Podcast EP018

McLerran & Associates

Global Dental Relief

How to Win Friends & Influence People by Dale Carnegie

The One Minute Manager by Kenneth Blanchard and Spencer Johnson

The Richest Man in Babylon by George S. Clason

Do you need to solicit a formal valuation for your practice? Or can you leverage other resources to get a general idea of its appropriate list price?

On this episode of the Dental Practice Sale podcast, host Wes Read explains why the profit and loss statement is the primary document for determining the value of a practice.

Wes walks us through the anatomy of a P&L and describes how to calculate the true cashflow profit of a dental practice as well as its approximate list price.

Listen in for insight on using Practice Orbit’s price estimator tool and learn what to do if your practice is worth more than a bank is willing to lend.

Topics Covered

The success of the launch of our Practice Orbit dental practice marketplace

How Practice Orbit serves as the MLS for dental practices

What makes Practice Orbit a technology company rather than a broker

How Practice Orbit is leveraging agile development to improve over time

When you need to get a formal valuation for your practice (and when you don’t)

Why the P&L is the primary document for determining the value of a practice 

Wes’ insight into the anatomy of a P&L for a dental practice

Operating income + add-backs = true cashflow profit of a practice 

How Practice Orbit’s pricing tool estimates the value of a dental practice

How the cashflow of a dental practice translates to list price

What to do if your practice is worth more than a bank is willing to lend

How DSOs determine the value of a practice differently than private sales

Connect with Wes Read

Practice Orbit

Email [email protected]

Practice CFO

Practice CFO on Instagram

Practice CFO on Facebook

Practice CFO on YouTube

Resources 

Practice Orbit Price Estimator

You cannot sell a dental practice without clean books. And you definitely shouldn’t buy a practice without having an accountant evaluate its potential profitability.

But a good dental CPA has value beyond assisting with the basics of bookkeeping and price assessment.

So, what is the full value proposition of an experienced CPA in the context of a dental practice sale?

On this episode of our Dental Practice Transitions series, Dental Attorney Matt Odgers serves as guest host and interviews Wes Read on the role of a CPA in the practice transaction.

Wes explains how a good dental CPA forecasts the range of profitability for a buyer, and he walks us through the process of financial due diligence in a dental transition.

Listen in to understand how a CPA helps buyers make business decisions after closing and develop the mindset of a business owner to grow a financially successful dental practice.

Topics Covered

An overview of the CPA’s role in a dental transaction

How a good dental CPA assesses the profitability of a practice

Wes’ approach to forecasting the range of profitability for a buyer

How Wes defines financial due diligence in a dental transaction

Using a seller’s tax returns to validate data on a P&L

How a dental CPA might coach buyers on business decisions

What to do as a seller if your books are not in order

What a buyer should expect in terms of CPA fees for due diligence

PracticeCFO’s relationship with a buying dentist after closing

What differentiates the mindset of a clinician vs. business owner

Connect with Matt Odgers

Odgers Law Group

Email [email protected]

Connect with Wes Read

Practice Orbit

Email [email protected]

Practice CFO

Practice CFO on Instagram

Practice CFO on Facebook

Practice CFO on YouTube

Resources 

What You Need to Know About Submitting an LOI on DPS EP003

Must-Have vs. Nice-to-Have: Shaping the Terms of Your LOI on DPS EP004

Practice Sales: The Role of Escrow on DPS EP010

Practice Sales: The Role of an Attorney on DPS EP011

Episode Promo Videos 

Video Promo 1

Video Promo 2

Every dental practice sale involves several legal documents. And that’s why an attorney is a crucial part of the transition team for both buyers and sellers.

But what, exactly, does a dental attorney do in the practice sale process? What should you look for in an attorney to help you buy or sell a dental practice?

On this episode of our Dental Practice Transitions series, Dental Attorney Matt Odgers is back with host Wes Read to discuss the role an attorney plays in the dental practice transition.

Matt and Wes walk us through the legal documents required in every practice sale as well as the deal-specific ancillary documents you might need.

Wes asks why it’s crucial to have a dental attorney review your LOI, and Matt explains what an asset sale agreement does and how it’s negotiated. 

Listen in for insight on the attorney’s role in negotiating either the lease or real estate purchase agreement and learn why it’s beneficial to use a dental specific attorney for your practice transition!

Topics Covered

The documents a dental attorney addresses in a given practice sale

Why it’s crucial to have a dental attorney review your LOI

What provisions in an LOI are binding (and which ones are non-binding)

How a good LOI includes timelines for due diligence

Matt’s approach when a buyer has little money in the bank but needs an LOI review

The purpose of the asset sale agreement and how attorneys negotiate it

Why it’s beneficial to use a dental specific attorney vs. a general business attorney

How a good dental attorney moves the deal forward when the other side won’t budge on a particular term

The attorney’s role in reviewing a lease and negotiating with the landlord

When to ask for a lease extension when the buyer takes over

How the process differs when a seller is at the end of their lease or owns the real estate

When you need a workback agreement or seller financing note

Connect with Matt Odgers

Odgers Law Group

Email [email protected]

Connect with Wes Read

Practice Orbit

Email [email protected]

Practice CFO

Practice CFO on Instagram

Practice CFO on Facebook

Practice CFO on YouTube

Resources

What You Need to Know About Submitting an LOI on DPS EP003

Must-Have vs. Nice-to-Have: Shaping the Terms of Your LOI on DPS EP004

The Role of Escrow in a Dental Practice Sale on DPS EP010

Episode Promo Videos

Video Promo 1

Video Promo 2